Brexit to pose ‘all-consuming’ task for Whitehall

Whitehall is preparing for the biggest bureaucratic upheaval for a generation in the event of a Leave vote, as the engine of British government is reconfigured and centralised to cope with an EU exit.

While informal planning is kept to a tight circle, officials at the top of the civil service are looking at options to create either a Brexit super-ministry or a dedicated trade department to manage an EU divorce and its consequences, according to aides familiar with the discussions.

“It is the biggest administrative and legislative challenge that government has faced that I can remember, possibly since 1945,” said Sir Simon Fraser, former permanent secretary at the Foreign Office. “It would be a pretty all-consuming task for many Whitehall departments,” he added.

Senior officials see the untangling of 40 years of EU membership as something akin to a legal “revolution” that would dominate the Queen’s speech for the next five to 10 years.

This includes deciding what to keep, amend or reject from thousands of EU related laws on the UK statute book and 12,295 regulations that have direct effect and would cease to apply the moment the UK leaves.

Britain would at the same time be negotiating an EU divorce to end old obligations, and refounding its future trade terms with the bloc and the world.

That may involve simultaneous trade talks with scores of non-EU countries to re-confirm or revise preferential access that expire after Brexit, as well as around 100 or more mutual recognition agreements in an area like financial services.

At a minimum the task will involve significantly expanding the European and Global Issues Secretariat of the cabinet office — known as Egis —handing it a more powerful remit over policy areas stretching into departments for home affairs, business, agriculture and Treasury.

Some senior officials speculated that it may become a Brexit ministry, either taking on trade responsibilities that currently sit in the department for business, or working in conjunction with a standalone trade ministry negotiating non-EU deals. Given the political sensitivity, a senior cabinet minister is expected to take charge of the talks.

Most worrying for Whitehall planners is how to rebuild trade expertise, which has withered since 1973 when Britain empowered the European Commission to negotiate on its behalf. Estimates range from a dozen to 20 individuals in Whitehall with anything resembling direct experience.

“There is absolutely no capacity to do it and it needs to be built up. The idea that you start all of these negotiations with capacity that is not just weak or old, but basically non-existent is like trying to bail an Olympic swimming pool with a thimble,” said David Claydon, a former economic adviser in the Foreign Office now at Macro Advisory Partners. “It would be unbelievably difficult and entirely unrealistic.”

Options being considered to fill the skills gap include hiring outside law firms or consultancies — as the Treasury did during the 2008 banking crisis -— and seeking to recruit experienced trade negotiators from the US, Europe or Asia. Some informal approaches have already been made.

Many countries use private sector lawyers to advise them during negotiations and undertake the “legal scrub” — making sure the final agreement is watertight. But some of the best law firms might find it disadvantageous to accept the UK government and British companies as clients if they are already acting for foreign governments and businesses.

There are perhaps 100 British eurocrats with experience of working in Brussels on trade. But most, at this stage, seem reluctant to leave Brussels or accept a pay cut when lucrative private sector options are available.

“They will find some clever people in Whitehall if they have a good hunt around,” said one British official with high-level experience as a trade negotiator. “But when you start cold you do not have the contacts in countries. That matters. People are amazed by how thick and important the relationships are in the trade world.”

A former European trade negotiator compared the skills of current UK officials, who oversee EU trade policy rather than negotiate deals, as the difference between a football manager and a striker. “Managing a team is not the same as being able to score goals,” he said.

Any Whitehall overhaul will in part depend on political direction — something that may take several months to become clear in the post-Brexit turmoil within the government.

“There is far less certainty than even in a general election. At that time before a vote, you are at least speaking to the parties and clear on options. Nobody knows how this will pan out,” said one Whitehall official.

A lack of clear political direction raises the potential for a messy turf war between Whitehall fiefdoms. “The civil service and cabinet office will have to deal with a government crisis and a parliamentary crisis before you get down to the negotiating objectives and the process for getting out,” said Lord Turnbull, the former cabinet secretary. Whitehall tensions “may be worse if there is no politician to resolve the competition”, he added.